During its monthly meeting Thursday, the Board of Economic Advisers decided not to change the revenue estimates for the current year. That comes after several major revenue reductions over the past year.
The state economists have projected that the state of South Carolina will have $5.619 billion in revenues for this year, the same projection since November, when the figure made a two percent drop from the previous month. The projection is currently $5.622 billion for next fiscal year.
Board Chairman John Rainey said the economy is sliding on the bottom and there are no additional cuts recommended from the board’s current projection this month. “At least that’s it today,” he said. “It’s tough to anticipate in this environment. The big problem is unemployment. Employment has not picke up. Employers are not hiring people back.” Rainey says many of the jobs that were around three years ago were either with companies that have closed, or technology has taken their jobs.
Rainey says to put the current budget in perspective, realize that in the fiscal year ending in June 2007, the state collected just over $7 billion, about 25 percent more than this year.
Chairman Rainey says South Carolina residents will have to get used to a higher level of unemployment being the new norm. But he says the top level of 7.5 percent that we can expect when the economy gets its strength back is actually an old norm.
(Rainey on unemployment MP3 1:04)
Rainey on unemployment
Rainey says South Carolina’s unemployment rate probably won’t drop below ten percent for several years, and then will likely be around nine percent for some years after that.
Rainey says the state’s economy has bottomed out, and at least shouldn’t be getting any worst, even if it doesn’t get better, this year. But he says the board has been wrong before. And he says one area may continue to worsen nationwide. “We haven’t seen the bottom in the commercial real estate business,” said Rainey. “That’s another shoe left to drop.”
National economists have warned that some local banks may close in 2011 due to a decline in the commercial real estate market.